Zappos_comppt by DebashishBagg1


									Clothing, Customer Survive and
              Company Culture
               Submitted by Group 8
   Brief history
   Happiness
   3 C’s
   Company culture
       Core values
       Application process
       Cost of recruitment and training
   Customer Service
       Fulfillment center
       Distribution Center
   Clothing
   Service delivery model
   Actual sales
   Requirement for merger
Tony Hsieh
•   1994-1995: Pizza business in
•   1996-1998: LinkExchange
    (online advertising)
    Sold to Microsoft for $265
•   1999: Venture Frogs (investment
    fund) - Invested in,
•   1999:, Inc.
•   Nov 2009: Amazon acquires
 Company History
Year   Milestones
2000    Nick Swinmurn and Tony Hsieh function as co-CEOs of Zappos.
        Zappos records $1.6 million in gross sales.
2001    Sustained effort produces $8.6 million in gross sales for Zappos.
2002    Zappos leases the Fulfillment Centers in Shepherdsville, Kentucky.
        The brand elevates gross sales to $32 million.
2003    Gross sales at Zappos rise to $70 million.
2004    Sequoia Capital infuses a significant amount of cash into Zappos.
        Zappos moves its Headquarters and call-center operations to Henderson,
        Zappos opens its first outlet store in Kentucky.
        Employee input is solicited for the publication of the first “Culture Book.”
        Gross sales at Zappos more than double to $184 million.
2005    Sequoia increases its investment in Zappos to a total of $35 million.
        Alfred Lin, cofounder of Venture Frogs, joins Zappos as CFO.
        A quit-now bonus of $100 is offered to new hires so that they will consider
          leaving the company after training if they think they aren’t a fit with the
          culture at Zappos.
        Zappos is named E-tailor of the Year by Footwear News.
        Gross Zappos sales double again, to $370 million.
Company History
2006      Nick Swinmurn leaves Zappos to follow a passion for creating other
           successful start-up businesses.
          Zappos expands and moves into larger Fulfillment Centers in Shepherdsville,
          Gross sales at Zappos climb to $597 million.
2007      Zappos launches a Canadian site.
       ’s footwear and accessories e-tailor is acquired by
          Zappos expands its product categories to include eyewear, handbags,
           clothing, watches, and kids' merchandise.
          Gross sales at Zappos hit $840 million
2008      Zappos lays off 8 percent of its workforce after investor Sequoia Capital,
           anticipating a sluggish economy, sends the message to its portfolio
           companies (including Zappos) that they need to cut expenses as much as
           possible and get to both profitability and positive cash flow.
          Zappos Insights is launched to help leaders, managers, and employees from
           other businesses benchmark Zappos.
          Gross sales at Zappos hit $1 billion.
What is your goal in life?

     Grow             Get a          Boyfriend /
   Company                                               Be Healthy
                    Great Job         Girlfriend
     why?             why?               why?              why?

    Retire           Make            Find Soul
    Early                                                Run Faster
                     Money             Mate
     why?             why?               why?              why?

                     Buy A              Get               Run A
   Time w/
                     Home              Married           Marathon
             why?        why?        why?         why?

                       Tony Hsieh – CEO (
Three Cs


       Clothing              Customer
    Company Culture
   Differentiator that gave them competitive advantage
   2005 they debuted their core values
   Value # 7 – employees are encouraged to spend 10-20% of
    their free time socializing outside of work
   2008 created culture book
   Started a pipeline
       225 hours of core training
       160 initial/new hire training
       Additional courses: effective communication, coaching, overcoming
        conflict, & managing stress
       39 Opt hours: Inspiring Great Teams, Leadership Zappos Style, &
        Cultivating Culture
Core Values
   Deliver WOW through customer service

   Embrace & drive change

   Create fun & a little weirdness

   Be adventurous, creative, & open- minded

   Pursue growth & learning

   Build open & honest relationships

   Build a positive team & family spirit

   Do more with less

   Be passionate & determined

   Be humble
Application Process

   Personal theme song
   Rate themselves on a weirdness scale
   Assess how lucky they consider themselves
   Two interviews: skill based & culture based
   10-15 questions based on core values
   4 weeks paid training focused on call center training, offered
    $2000 to leave
Recruitment cost Training hours
Recruitment and training
let the cost of initial process per person      x
cost of recruitment (at Zappos)                 100x
success rate of initial training                y
Compensation for those who return (pg 6)        2000 (1 -y)
Cost of recruitment (at Zappos) after 4 weeks   100x / y
if 'n' employees are needed
Total cost                                      n(100x / y + 2000 (1 -y))
Retention percentage (given for call center)    20% (if generalized)
Total cost                                      .8n(100x / y + 2000 (1 -y))

   Training course                    Training hours
   Core level training                               255
   Leadership training                                39
   Also grooming with other employees         10% - 20%
                    Customer Service

   Believe rapid growth was due to customers’ loyalty
   CLT team receives an average of 5,100 calls
   Goal is to wow customers & establish personal connection
   Calls times are not measured
   Call center turnover in 2009 was only 7% whereas industry
    average was 150%
   Help customers find shoes regardless if Zappos carries them or
   Strive to beat customer expectations
Fulfillment Center

   Located in foreign trade zone so vendors can ship directly, bypassing
   License Plate Codes & 100% Random
   Three storage areas
       Static racks – Freestanding shelving units
       Carousels – Ferris wheel type shelving system
       Kiva – Automated storage & retrieval system using inventory pods
   Do not implement a pay-per-performance or reward system
       Computers set up in internet café
       Karaoke, Wii guitar hero & rock band, free drinks, lunch & vending machines
       Employees know the job itself isn’t great but all the perks really make a
Fulfillment Center
   Originally conducted drop shipping
   Brought inventory in house in 2000
   Purchased shoe store in Willows, Ca
   Purchase abandoned building across the street & used as
    distribution center
   Tried third party fulfillment center
   Within 6-8 weeks, developed their own fulfillment center
   2003-75% of orders shipped from fulfillment center
   Cut 25% of its business in short term, but provided to be the
    best decision

   2006 – pursued additional lines of business
   U.S. clothing market was four times larger than footwear
   Within 1 year Zappos had 130 different apparel brands
   2007 clothing reached 5% of Zappos sales
   2008 Zappos sold $31 Million in apparel
   Challenge was to get customers to see Zappos as more than just
    a shoe retailer
Service delivery system


         Fill in volumes

  Provided the basis for employee
                                           Repeat purchase

           Corporate                Customer
            culture                  Service

    Creating ‘y’ type employees
Sales figures
  Gross sales ($ millions)

                                      2000     2002      2004     2006        2008
                                      Gross Sales     Old sales   New sales

To top